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GOP Struggles to Explain AHCA’s $880 Billion Medicaid Cuts

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Days after the passage of the American Health Care Act, House Republicans and members of the Trump administration are now facing sharp questions from the media and the public about how repealing and replacing the Affordable Care Act will impact people’s health care. When it comes to Medicaid, they are struggling.

President Trump, who has loudly endorsed the legislation, repeatedly promised during his campaign that he would not allow any cuts to the program, which provides care to low-income Americans. However, A Congressional Budget Office analysis of the legislation determined that one of its effects would be an enormous decrease in federal spending on the program, amounting to $880 billion over 10 years.

This puts people like Health and Human Services Secretary Tom Price, who appeared on CNN’s State of the Union in an awkward position. Asked if Trump is breaking his promise of no cuts to Medicaid by supporting the AHCA, he obviously wasn’t going to agree, so he took the more challenging route, insisting that despite the loss of the better part of a trillion dollars over the next decade, that “there are no cuts to the Medicaid program.”

“There are increases in spending,” he insisted. “But what we’re doing is apportioning it in a way that allows the states greater flexibility to cover their Medicaid and care for their Medicaid population. This is incredibly important, and I know that the media loves to talk about the cuts that the CBO talks about, but again, what the Congressional Budget Office measures is spending as if nothing changes at all as if the program is doing just fine thank you very much.”

Later, he expanded on his point, adding, “The reduction in spending that the Congressional Budget Office cites is off the current law baseline. That is, if we did nothing at all, if we just continued this broken program for the next 10 years, how much money would the federal government spend? I would suggest to you that the American people are sick and tired of business as usual in Washington.”

Price is arguing that the reduced spending shouldn’t be considered a “cut,” because the restructuring of the program will create conditions under which it is no longer necessary to spend the money in the first place. The “increases in spending” he referred to are annual adjustments tied to the rate of inflation of medical costs.

The restructuring of the program, though, involves elimination of the Medicaid expansion that occurred under the ACA and capping the amount of money the federal government spends by turning the program into a block grant administered wholly by the individual states.

“Are you actually saying that $800 billion in cuts, according to the CBO, however you want to talk about that not being a cut, that that’s actually not going to result in millions of Americans not getting Medicaid?” host Jake Tapper asked Price.

“Absolutely not,” Price said. “And we believe strongly that the Medicaid population will be cared for in a better way under our program because it will be more responsive to them. These decisions will be made closer to them.”

It was a claim that Republican supporters of the bill made repeatedly on Sunday, accompanied by a lot of hand-waving about the magic of allowing states to tailor the program to their population.

House Speaker Paul Ryan faced a similar question on ABC’s “This Week” from George Stephanopoulos, who asked, “So, you don't think anyone will be hurt when you're taking $880 billion out of the system?”

“No, no, I don't, because I think the micro-management of Medicaid by the federal government -- the Medicaid system isn't working,” Ryan said. “Doctors aren't taking Medicaid; hospitals can't survive with Medicaid alone. So, by giving the states the ability to customize their Medicaid population their program to work for them. Whenever we have had a waiver given to a state so they can customize, it works better. So, we want to give every state the ability to make sure that they can customize this program to work for the unique needs of their vulnerable populations.”

But again, the magic of state control doesn’t account for the fact that much of the savings from the bill is results from reducing the number of people who qualify for Medicaid in the first place. After 2020, people who would qualify for Medicaid under the expansion today, no longer will. Those people will, most likely, be eligible for subsidies to try to find coverage on health care exchanges. But critics argue that they are inadequate.

Republican Gov. John Kasich from Ohio, a critic of the bill, pointed out that many of the people who are struggling with addiction and mental illness could lose access to Medicaid under the AHCA if states decide to limit access to the program because of limited funds.

“What can you buy for $3,000 or $4,000 a year? Not much,” he told CNN’s Tapper. “And if you have to consistently visit the doctor, how are you going pay for that? The deductibles will be so high. And, again, in Medicaid, you are going to knock all these people off after 2020, which is just a few years away, these people who now are getting covered across the country.”

White House Office of Management and Budget Director Mick Mulvaney, appearing on CBS’s Face the Nation, went so far as to insist that nobody will suffer at all under the House proposal.

“Everybody will have coverage that’s better than what they had under Obamacare,” he said.

When host John Dickerson pressed him on the CBO finding that 24 million fewer Americans would have coverage under the bill, many because of the loss of Medicaid expansion, he mislabeled the CBO’s finding.

“I saw the CBO score,” he said. “When you get down into the details of it, one of the things you see is that the CBO assumes that once the mandate is gone, people will voluntarily drop off of expanded Medicaid. Think about that for a second, The CBO is assuming, getting to that 24 million people, you get Medicaid for free, but once the mandate that you take it is gone, you voluntarily give up a free benefit. It’s just absurd.”

That is not at all what the CBO said. The analysis of the bill said that there are some people -- a number is not specified -- who are eligible for Medicaid and either don’t know it or don’t bother signing up for it. The ACA’s individual mandate meant that if those people went without coverage, it would trigger a tax penalty.

CBO’s point is that the penalty caused some people who might not otherwise have signed up for Medicaid to do so. “CBO estimates that, without those penalties, fewer people would enroll in Medicaid, including some who are not subject to the penalties but might think they are,” the analysis reads. It also pointed to the millions of people buying insurance on the exchanges who may be young and healthy and believe, often wrongly, that they don’t need health insurance.

Perhaps there is a strong policy argument in favor of the AHCA’s plan for Medicaid. But when your go-to defenses of a Medicaid policy are semantic claims about the meaning of “cuts,” ignoring its obvious effect on the number of eligible recipients, and misrepresentation of a professional analysis of its effects, they are pretty difficult to find.

A longtime reporter on the intersection of the federal government and the private sector, Rob Garver served as a National Correspondent, based in Washington, D.C., for four years. He has written for ProPublica, The New York Times and other publications.